Author Topic: Strategy to start a more mustachian way of living  (Read 3962 times)

Kexxis

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Strategy to start a more mustachian way of living
« on: January 22, 2015, 09:49:41 AM »
Hello everyone,

In the past week I have been reading the MMM blog and forums and thinking of ways to transition my life into one that is more financially aware. I am a 27 year old engineer residing in Nova Scotia, Canada (highest total tax rate in all of Canada at 15%). I currently make a 60k/year salary with a take home of 3200/month. I will be able to contribute 3% of my regular earnings to a company RRSP plan where they will match 2% after my 3-month probation is finished. I have made some poor financial decisions prior to learning about MMM and the most significant being I have a leased vehicle (1.5 years remaining on the lease, it was a 3yr lease in the beginning). Here are the current numbers I am working with:

Income (take home): $3200/month

Total Debt: $8500 which is all on a line of credit

Current Monthly Payments:
Car Lease Payments: $450
Car Insurance: $80
Gas: $100
Cell Phone: $70
Dog: $175
Food: $300
Rent $400 (Living at parents)
Misc $200 (Extra expenses)

Total Payments: $1775/month

Leaving me with around $1425/month.

I am trying to develop a short and long term strategy. I currently live fairly far from work (25-30 minutes of highway driving) so I was considering the possibility of moving directly next to my place of work and attempt to find someone to transfer my car lease to. I also have the option of buying out the car after the lease has finished. The residual would be about 10k which could be financed. I also live with my girlfriend and she basically has an income of 0 and plans to be in school for the next 6 or 7 years (eep :/). Which means I will be paying the majority of rent and food bills.

My current frame of mind is as follows:

1)Put all extra money into my debt until it is completely paid off/attempt to transfer lease/buy or rent a place close to work
2)Start maxing out my RRSPs (including carryover from previous years I have missed). I am not sure if I should start investing money into RRSPs the same time I am paying off my debt?

Any advice would be greatly appreciated. Please let me know if you need any more information.



 


caliq

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Re: Strategy to start a more mustachian way of living
« Reply #1 on: January 22, 2015, 10:03:09 AM »
What's the interest rate on your LOC?

Kexxis

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Re: Strategy to start a more mustachian way of living
« Reply #2 on: January 22, 2015, 10:06:57 AM »
The LOC has an interest rate of 7.99%

MarciaB

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Re: Strategy to start a more mustachian way of living
« Reply #3 on: January 22, 2015, 10:22:45 AM »
Rent $400 (Living at parents)

I also live with my girlfriend and she basically has an income of 0 and plans to be in school for the next 6 or 7 years (eep :/). Which means I will be paying the majority of rent and food bills.



A question - you and your girlfriend live with your parents? (How's it going?!)

Also a concern - your footing the bill for 6-7 years of your girlfriend's living expenses...for a spouse I can see it, but for a romantic attachment with no legal backing? This sets off an alarm bell in my head.
My (admittedly kinda lame) blog on topics having to do with stuff, paring down your stuff to nothing, travel, and misc: www.baggypop.com

Kexxis

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Re: Strategy to start a more mustachian way of living
« Reply #4 on: January 22, 2015, 10:30:57 AM »
The living arrangements currently are fine because my parents have been living closer to their parents recently. And I have brought my concern about me needing to pay bills for that long and essentially she will be paying $200/month starting next month or so to help me out.. I am not sure how I can push additional money out of her for bills when she doesn't have much. I do agree it is a little unfair for me to be paying that much - I am trying to approach her about it often but I am not making much progress

Seņora Savings

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Re: Strategy to start a more mustachian way of living
« Reply #5 on: January 22, 2015, 10:47:20 AM »
The LOC has an interest rate of 7.99%

Pay that shit off yesterday!

It sounds like you don't want to pay your girlfriends bills.  Guess what?  You don't have to.  If she doesn't have housing and food that's her problem, not yours.  In my experience she is either paying to be in grad school or getting paid to be in grad school.  If it's the former  she can take out some extra loans to cover her living expenses, if it's the latter, she can cover herself.  You should not be taking out a personal line of credit to cover her education.  Obviously every situation is different and this may be what works out for the two of you, but your replies indicate that it doesn't.  If you can't work out finances now it's best for the relationship to end.

Kexxis

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Re: Strategy to start a more mustachian way of living
« Reply #6 on: January 22, 2015, 10:55:00 AM »
I'm not paying for any of her schooling, I would certainly never do that. The rent at my current place is quite low so how I see it is I am only really paying for her food. The line of credit is from my own expenses which is my primary focus to pay off.

themagicman

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Re: Strategy to start a more mustachian way of living
« Reply #7 on: January 22, 2015, 11:00:47 AM »

Cell Phone: $70 Is this just for you? Or you and your GF? This is high if just you
Dog: $175 Wow! That is an expensive dog. Why so high?
Food: $300 Same as Cell phone


I also live with my girlfriend and she basically has an income of 0 and plans to be in school for the next 6 or 7 years (eep :/). Which means I will be paying the majority of rent and food bills.


Why will it take her so long to finish school? Is she planning to go to law/medical school?

Kexxis

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Re: Strategy to start a more mustachian way of living
« Reply #8 on: January 22, 2015, 11:08:41 AM »

Cell Phone: $70 Is this just for you? Or you and your GF? This is high if just you
Dog: $175 Wow! That is an expensive dog. Why so high?
Food: $300 Same as Cell phone


I also live with my girlfriend and she basically has an income of 0 and plans to be in school for the next 6 or 7 years (eep :/). Which means I will be paying the majority of rent and food bills.


Why will it take her so long to finish school? Is she planning to go to law/medical school?

The food bill is that high because it is for two people. The dog bill is that high because he goes to a camp a few times a month when neither of us are home for 8+ hours (I could alleviate this by living next to work so I could go see him during lunch). That would bring it to around $75/month. The phone contract is up soon and I am going to reduce it drastically after that.

caliq

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Re: Strategy to start a more mustachian way of living
« Reply #9 on: January 22, 2015, 02:23:47 PM »
6 years sounds like a PhD?  Your girlfriend should be getting a research fellowship or teaching fellowship position that will cover her living expenses?

How big is your dog?  Depending on size, that could still be a hefty budget.  I budget $120/month for 2 big dogs (like over 100 lbs big) and they're on expensive grain free kibble.  My dogs like playing with empty plastic bottles more than they like fancy toys (which they destroy immediately) :)

Do you not have anything in savings? 

Definitely pay off the LOC immediately as others have said.

Figure out some solid numbers on different options for getting out of your lease.  You won't be able to make a good decision on the car until you know the pros/cons of each option. 

Kexxis

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Re: Strategy to start a more mustachian way of living
« Reply #10 on: January 22, 2015, 02:38:34 PM »
6 years sounds like a PhD?  Your girlfriend should be getting a research fellowship or teaching fellowship position that will cover her living expenses?

How big is your dog?  Depending on size, that could still be a hefty budget.  I budget $120/month for 2 big dogs (like over 100 lbs big) and they're on expensive grain free kibble.  My dogs like playing with empty plastic bottles more than they like fancy toys (which they destroy immediately) :)

Do you not have anything in savings? 

Definitely pay off the LOC immediately as others have said.

Figure out some solid numbers on different options for getting out of your lease.  You won't be able to make a good decision on the car until you know the pros/cons of each option. 

She is doing a bachelors into a master's degree program - at least that is her current plan. So 4-5 years for the bachelors and 2 years for the master's degree.

My dog is medium sized, 60lbs and still under a year old so I have been feeding him puppy food, which runs about $65 per bag. The majority of that cost is from the dog daycare. I am sure I could save money on the food I am purchasing as well as going with no cost toys like you have mentioned.

Unfortunately I have nothing in savings yet but I am going to change that as soon as the LOC is payed off.

A family member is interested in taking over my lease which may be a simple way out of it. As far as I know I would just need to pay the lease transfer fee and cut my losses I suppose. If I chose to go down this route and get a place near my work I may not save save any more because I would then need to pay additional rent, utility bills, and basic internet. I would save myself a lot of time which could be invested in many ways. The other option I was considering is transferring the lease and continue to live here. This would result in a 1.5 hour bus ride each way which may be a bit more than I can handle.

caliq

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Re: Strategy to start a more mustachian way of living
« Reply #11 on: January 22, 2015, 02:46:36 PM »
Yikes -- what are you feeding him?  I hope at that price it's a high quality food.  Depending on how old he is and his breed/expected adult size, you might be able to switch to adult food now. 

Can you save your monthly surplus for two months to get to 3k and then swap the lease to your family member, or do they need the car immediately?  If you had 3k saved up you could pay cash for a cheap-ish car that will work for now, until you get the LOC paid off and some savings built up.  I wouldn't move out into an apartment before you get an emergency fund built up and the LOC paid off, especially because you'll be the only income earner for a significant period of time. 

Or if your family member does need the car ASAP, you could try to suck it up on the bus for a month or two and then buy a car?  Don't forget you'll have your current surplus + car lease payment + auto insurance payment + gas budget to put towards your new-to-you car fund, so around $2k/month. 

Kexxis

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Re: Strategy to start a more mustachian way of living
« Reply #12 on: January 22, 2015, 03:53:00 PM »
Okay I just double checked the price - little lower than I thought. It is BLUE Wilderness: Grain Free Puppy Food at PetSmart. A 24lb bag ranges from 56-63 depending on if it is on sale. Do you have any recommendations for good priced high quality food for when I make the switch to adult food?

It isn't urgent to get rid of my car, I was just in the mindset that the sooner I get rid of my car the better with the hopes of using public transportation or within walking distance of work. I know the family member that is interested in my lease has a 2007 Mazda 3 I could consider purchasing if they took over my lease.

caliq

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Re: Strategy to start a more mustachian way of living
« Reply #13 on: January 22, 2015, 04:02:38 PM »
I don't know if they exist in Canada, but I pay $37 for a 30 lb bag of 4Health grain free from Tractor Supply.  You can also check out this website: http://www.dogfoodadvisor.com/ for more options.  I think Costco has a store brand (Nature's Domain?) that's even cheaper -- I don't feed it because I'd have to drive an hour to the closest Costco and one of my dogs has weird food allergy-ish issues so I'm reluctant to switch foods.  Another thing to check is seeing if having it auto-delivered from an online store is cheaper; some of them offer free shipping and % off discounts if you set up an automatic monthly order.  Chewy.com is one I think.

A car swap with your relative for the Mazda 3 sounds like it might be a perfect solution! 

Edit: Lots of people on the Great Dane forum I also follow are pretty positive about the Costco Nature's Domain grain free, and they get it in Canada for like $30/30 lb bag apparently.  Dane people are pretty crazy about food quality vs. price maximizing (they eat SOOO much!) so I'd be pretty confident in it's quality.  Now I'm thinking about switching again myself lol.  For you it would practically halve your dog food costs -- that's pretty good! 
« Last Edit: January 22, 2015, 04:06:56 PM by caliq »

Seņora Savings

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Re: Strategy to start a more mustachian way of living
« Reply #14 on: January 22, 2015, 04:17:18 PM »
I'm not paying for any of her schooling, I would certainly never do that. The rent at my current place is quite low so how I see it is I am only really paying for her food. The line of credit is from my own expenses which is my primary focus to pay off.

You are paying her living expenses so that she can be in school and you are taking out loans for your own expenses.  Any money you spend while in debt is keeping you in debt.  So spending money on her living expenses instead of paying down your debt is equivalent to taking out debt to pay her expenses.  Also, something is paying her tuition, what is that and why can't it also pitch in for food?

It isn't urgent to get rid of my car, I was just in the mindset that the sooner I get rid of my car the better with the hopes of using public transportation or within walking distance of work. I know the family member that is interested in my lease has a 2007 Mazda 3 I could consider purchasing if they took over my lease.

Every month that you own the car costs you $630.  If I was spending $20 a day on something it would be urgent to me.

Shade00

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Re: Strategy to start a more mustachian way of living
« Reply #15 on: January 22, 2015, 04:44:27 PM »
Okay I just double checked the price - little lower than I thought. It is BLUE Wilderness: Grain Free Puppy Food at PetSmart. A 24lb bag ranges from 56-63 depending on if it is on sale. Do you have any recommendations for good priced high quality food for when I make the switch to adult food?

It isn't urgent to get rid of my car, I was just in the mindset that the sooner I get rid of my car the better with the hopes of using public transportation or within walking distance of work. I know the family member that is interested in my lease has a 2007 Mazda 3 I could consider purchasing if they took over my lease.

My dogs have sensitive stomachs and I thought I was going to be buying expensive Blue or Natural Balance forever. I successfully switched them to Costco Nature's Domain, which is about $30/35lb bag. I saved the Costco membership fee very quickly because I buy food less often and it's soooo much cheaper.

swick

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Re: Strategy to start a more mustachian way of living
« Reply #16 on: January 22, 2015, 05:20:00 PM »
A thought on helping with the GF living situation - none of us are in your relationship, we don't know how committed you are to each other - but all the advice posters have noted here is good advice from a strict numbers/risk point of view.

If you are not at the point in your relationship where you have had serious financial and money discussions and know you are on the same page - you should not be taking the risk.

It sounds like she is in the early stages of her university career, does she know what her job prospects are once she is finished? Does she have a plan in place? Will the career options be there in her field that will make the time and money investment (not to mention the lost opportunity cost of working for the next 7 years) worth it?